Three Surprising Financial Pitfalls For Divorcing Couples
There are many reasons why a divorce may leave you penniless. Some of these reasons are inevitableor example, you have to pay your lawyer and other professionals helping you with the process. There are also reasons, however, that you can avoid. Examples of these avoidable reasons include:
Shunning Some Assets
One of the worst mistakes you can make is to ignore assets that do not interest you. For example, you should discard that painting because art isn't your "thing" or shun the family trailer because your partner used it with his or her boyfriend. If you do that, then you will be giving your money away for free.
During property division, you should view everything in terms of money. Even if you don't want something, you can sell it after the divorce is over. In fact, the situation should be even easier if it is something your spouse values because you can exchange it with another thing or other things you consider valuable.
Ignoring Tax Implications
For every marital asset you wish to fight for, consider the potential tax consequences. Make every decision with its tax complications in mind. For example, if you have a choice between lump sum alimony and a monthly alimony, which option will require more tax payments?
Another good example is the family home: do you wish to keep it and sell it later on? If that is the case, and you sell it for at least $250,000 over what you paid for it, then you will owe some tax on the capital gains. There may be loopholes or options you can take to avoid serious tax hits, but you can only know them if you consider taxation as part of your decision-making process.
Getting Emotional About Money
Another grave mistake is to get emotional about money and properties. It is a fact that a divorce is an emotional process, but you should learn to manage your emotions and not let it interfere with your finances. It is a folly to make the divorce as combative as possible with an aim of making life difficult for your spouse.
For example, if you aren't businesslike, then you may end up spending a lot of resources (in terms of legal fees and time) fighting for things that won't help you much after the divorce. For example, fighting for an old camping van just because you don't want your partner to have it it may not be worth it.
Listen to your lawyer and let reason (financial and legal) guide you during the divorce process. If you want to vent out your feeling, consult your friends, pastor, or family members. When it comes to the practical matters of the divorce, consult your lawyer. For more divorce tips, contact a firm such as Tracy McMurtrie Luck & Associates.
Share